The year Bill Clinton became governor of Arkansas, that state’s prison board awarded a fat contract to a Little Rock company called Health Management Associates, or HMA. The company was paid $3 million a year to run medical services for the state’s prison system, which had been blasted in a ruling by the US Supreme Court as an “evil place run by some evil men.”

HMA not only made money from providing medical care to prisoners, but it also started a profitable side venture: blood mining. The company paid prisoners $7 per pint of their blood. HMA then sold the blood on the international plasma market for $50 a pint, splitting the proceeds 50/50 with the Arkansas Department of Corrections. Since Arkansas is one of the few states that does not pay prisoners for their labor, inmates were frequent donors at the so-called “blood clinic.” Hundreds of prisoners sold as much as two pints a week to HMA. The blood was then sold to pharmaceutical companies, such as Bayer and Baxter International; blood banks, such as the Red Cross; and so-called blood fractionizers, who transformed the blood into medicines for hemophiliacs.

HMA’s contract with the Arkansas Department of Corrections and its entry into the blood market coincided with the rise of AIDS in the United States. Regardless, HMA did not screen the torrents of prison blood, even after the Food and Drug Administration issued special alerts about the higher incidents of AIDS and hepatitis in prison populations. When American drug companies and blood fractionizers stopped buying blood taken from prisoners in the early 1980s, HMA turned to the international blood market, selling to companies in Italy, France, Spain, and Japan. But the prime buyer of HMA’s tainted blood, largely drawn from Cummings Unit prisoners in Grady, Arkansas, was a notorious Canadian firm, called Continental Pharma Cryosan Ltd. Cryosan had a shady reputation in the medical industry. It had been nabbed importing blood taken from Russian cadavers and relabeling it as though it was from Swedish volunteers. The company also marketed blood taken from Haitian slums.

Cryosan passed the Arkansas prison blood on to the Canadian Red Cross and to European and Asian companies. The blood was recalled in 1983 after the FDA discovered contamination, but less than one-sixth of the blood was recovered. In Canada alone, more than 7,000 people have died from contaminated blood transfusions, many of them hemophiliacs. More than 4,000 of them died of AIDS. Another 40,000 people in Canada have contracted various forms of hepatitis.

Dr. Francis “Bud” Henderson started HMA in the 1970s. As the company began to expand, he brought in a Little Rock banker named Leonard Dunn to run the firm. Dunn was a political ally and friend of the Clintons. He was appointed by Clinton to sit on the Arkansas Industrial Development Commission and served as finance chair of Clinton’s 1990 gubernatorial campaign. Later that same year, Dunn purchased the Madison Guaranty Savings and Loan (later to achieve great notoriety in the Whitewater Scandal) from Clinton’s business partner, James McDougal. Dunn later served as chief of staff to Arkansas’ Lt. Governor, Winthrop Rockefeller.

Dunn’s ties to Clinton served HMA well after the company came under scrutiny for both abusive treatment of prison patients and shoddy management of the blood center. In 1983, the Food and Drug Administration stripped HMA of its license to sell blood after it found that the company had failed to exclude donors that had tested positive for Hepatitis B, often a precursor of HIV.

A state police report, compiled as part of an investigation into the company’s operations at the Cummings Unit, noted that the FDA pulled the company’s license to sell blood “for falsifying records and shipping hot blood.” The report goes on to say that “the suspension was for collecting and shipping plasma which had been collected from donors with a history of positive tests for [Hepatitis B]…the violations were directly related to using inmate labor in the record and donor reject list.”

Dunn, and the Arkansas Department of Corrections, convinced the FDA that the fault lay with a prison guard who was taking kickbacks from prisoners in order to let them get back into the blood trade. The license was quickly restored and tainted blood once more began to flow.

That didn’t end the investigations. HMA’s contract was up for renewal by the prison board. When investigators began probing the company’s practices, Dunn repeatedly boasted of his ties to Bill Clinton. “Mr. Dunn spoke openly and freely and explained to these investigators that he was the financial portion of the corporation as well as its political arm,” investigator Sam Probasco stated in his report. “Dunn advised that he was close to Gov. Clinton as well as the majority of state politicians presently in office.”

The allegations against the company involved numerous health and safety violations, failure to test for diseases such as Hepatitis and syphilis, bad record keeping, falsification of records, and drawing blood from multiple patients with the same needle. Several former prisoners at Cummings are now charging that they contracted hepatitis and AIDS from the blood program.

Another incident involved a botched operation in which an HMA doctor unnecessarily amputated a prisoner’s leg at the hip. According to Michael Galster, a prosthetics specialist who worked at the Cummings Unit at the time, HMA hired Vince Foster, then with the Rose Law firm, to help squash the investigation. Galster says that Foster approached him asking that he build the prisoner an artificial leg, with the hope that it would prevent the prisoner from moving forward with a legal claim against the company.

“The purpose of his being there was to convince me to take this, smooth it over, and everybody would be happy,” said Galster. “I refused him. He said, ‘I understand your predicament. But this could make it difficult for you to get a future state contract.’”

Although Galster refused to go along, Foster seems to have accomplished his task. The state’s internal investigation of HMA cleared the company of any wrongdoing.

But an independent review by the Institute for Law and Policy Planning, a California firm, concluded that HMA’s work in the prisons was extremely deficient. The report cited more than forty contract violations and was replete with instances of negligence—in the care of patients and handling of the blood center. Much of the blame for the problem landed on another Clinton pal, Art Lockhart, who was the head of the Arkansas Department of Corrections.

When the independent review came out, pressure mounted for Clinton to fire Lockhart. Clinton swiftly nixed the idea, telling reporters that he didn’t believe the allegations were serious enough for him to “ask Mr. Lockhart to resign.”

The Arkansas State police launched a half-hearted investigation into allegations that HMA was awarded a renewal of its contract after they bribed members of the state prison board. The investigation soon focused an attorney named Richard Mays, a close friend of Bill and Hillary Clinton. Mays was given at least $25,000 by HMA to act as an “ombudsman” for the company, a position that featured no job description and no apparent responsibilities.

Mays, who served as a vice-president for finance at the DNC, has been at the heart of several Clinton scandals. In 1996, he was credited with securing Little Rock restauranteur Charlie Trie’s $100,000 contribution to the Democratic Party’s coffers. He also appears in the Whitewater probe, where he tried to stave off the federal prosecution of David Hale. Mays and his wife were frequent guests the White House, including an overnight stay in the Lincoln bedroom. Dunn claims that Mays was recommended to him by Clinton, as well as prison board chairman and Clinton intimate, Woodson Walker.

In 1986, HMA’s contract was revoked. But that didn’t stop the Arkansas Department of Corrections’ prison blood program. A new company, Pine Bluff Biologicals, took over the blood center and expanded it to include two other prison units. The new company’s safety record turned out to be about as dismal as HMA’s. Screening for AIDs was particularly lax. Pine Bluffs president Jimmy Lord dismissed such concerns and suggested that AIDs was not a problem in Arkansas. “If anyone got caught in a homosexual act,” Lords said, “we took them off the roster.”

By the late 1980s, Arkansas was the only prison in the United States still running a blood program. In 1991, a reporter for the Arkansas Times asked John Byus, medical director of the Arkansas Corrections Department, how much longer they planned to continue the operation, and was told, “We plan to stick with it till the last day, to the last drop we’re able to sell.”

The blood trade program stayed in operation until Bill Clinton moved to Washington. It was finally shut down in 1993 by his successor, Jim “Guy” Tucker.